College students think they manage money well, but they don’t, survey finds

American college students’ personal financial management skills are lacking—and yet they believe they’re good at managing their money, a recent AICPA survey found. Fifty-seven percent of the 751 students polled rated their financial management skills as “good” or “excellent,” but their spending and saving behavior indicates their skills are not as sharp as they believe.

Just 39% said they adhered to a monthly budget, for example, while almost half said there had been a point in the past 12 months when they had less than $100 in their bank accounts. Just under half (49%) said they had put money aside for tuition in the past 12 months. Thirty-eight percent said they had borrowed money from friends or family.

Nevertheless, just 12% of students said their financial management skills were “poor” or “terrible,” while around a third (31%) rated their skills as “fair.”

The survey, which was conducted in August 2015 and included students who had enrolled for the 2015–2016 school year, found that students are interested in improving their financial management skills. Ninety-nine percent of students said that developing their money management skills is “extremely” or “very” important to them, and 84% said they were “extremely” or “very” interested in learning how to make better financial decisions.

However, students’ actions suggest there’s more they could be doing to improve their spending and saving habits. Only 23% said they “frequently” or “very often” sought out information about personal financial management and incorporated it into their financial decisions. Forty-one percent said they “never” or “rarely” did so.

Students do not receive much formal education on handling their finances before college, the survey found. Only 17% said they learned to budget in school, while 42% learned to do so from their parents or other relatives, and 37% taught themselves.

The AICPA’s National Financial Literacy Commission recommends that, to improve their finances while in college, students create a monthly budget and review it regularly. (The free student budget calculator on the AICPA’s 360 Degrees of Financial Literacy website is one tool they can use to do so.) The commission also suggests that students build credit by using a credit card for purchases they know they can pay off in order to build a credit score, and that they determine how much money they’ll need to make over the summer to pay their expenses for the next semester.